Abstract
In this paper we examine some characteristics of the innovation activities in China and in Taiwan. For comparison, we also highlight some high-technology features of Silicon Valley and California. We use two models to look at innovation activities in California, China and Taiwan: The “Silicon Valley” model and the “layered model”. For China, we highlight the important role of the early technology cluster in ZGC in Beijing. ZGC has some positive features for growth such as government support, spinoffs as well as agglomeration effect like Silicon Valley. But the most interesting development in China is the evolution of its internet-related sector. We argue here that the internet-driven economy is a radical, systemic technological change and it is rapidly growing in China. In addition, the development of the internet economy will have substantial implication for China’s nature of growth. It can boost productivity and may even propel China into a high-income economy. Taiwan’s development of high-technology relies on the establishment of a major science park and an important research institute. Like China, government support and the expertise provided by the trans-Pacific “returness” are crucial. But unlike China or Silicon Valley, Taiwan is stuck in a manufacturing- and hardware-focused segment of the industry. Taiwan needs to upgrade to software and the internet-focused segment but so far with limited success.
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Notes
This is in contrast to the European Union and also India, where there are many linguistic divisions.
Domestic Chinese internet companies include Alibaba, Tencent, Baidu, etc.
Taiwan still has the possibility to be a big player in niche internet activities, see Pan (2014).
New high-tech startups are often perceived to be the only organizational forms to generate significant innovation. However, older incumbent firms can also continue to generate creative products and new processes, e.g. see Santos et al. (2009).
For a discussion of the importance of job-hoping in Silicon Valley, see Fallick et al. (2006).
While in this paper, we focus on Silicon Valley as the benchmark for comparison with China and Taiwan, other parts of California also generate significant innovation activities. For example, it is well-known that San Diego has a strong cluster of biotechnology firms, e.g. see Casper (2007).
Wong (2014) also highlights the importance of youth in fostering creativity.
For more discussions on technology and industry clusters, see St. John and Pouder (2006).
For example, foreign investors in Alibaba include Softbank of Japan and Yahoo of the United States.
For an early discussion of how the growth accounting framework can be applied to East Asian growth, see Lau and Park (2003).
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Acknowledgments
We are grateful for very constructive comments by a referee. Portions of this paper are written while K.C. Fung is on sabbatical from the University of California and is a Visiting Professor at the School of Economics and Finance as well as at the School of Business of the University of Hong Kong. He appreciates the wonderful hospitality shown by the University of Hong Kong.
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Fung, K.C., Aminian, N. & Tung, C.Y. Some characteristics of innovation activities: Silicon Valley, California, China and Taiwan. Econ Change Restruct 49, 221–240 (2016). https://doi.org/10.1007/s10644-015-9162-x
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DOI: https://doi.org/10.1007/s10644-015-9162-x